Tata Steel says it is to invest £53 million in reducing the power needed by its Port Talbot steelworks.
The firm, which employs around 7,500 people in Wales, expects the scheme to save around 10MW of energy - enough to power 20,000 homes.
The investment will introduce a new cooling system in the Basic Oxygen Steelmaking (BOS) plant that will produce steam - allowing electricity to be generated.
Tata said it expects the work to be carried out in the second half of 2012.
Jon Ferriman, director of Tata Steel’s UK Strip Products business, said: “This project makes further advances towards our vision of becoming self-sufficient in energy, and also further improves our environmental performance.
“By equipping our BOS plant with a state-of-the-art evaporative cooling system, we will improve Port Talbot’s productivity and energy efficiency. We will also build on the ability to recycle and reuse process gases that our Energy Recovery plant brought us.”
News of the investment comes following Tata’s £185 million rebuilding programme of Port Talbot’s No 4 blast furnace, announced eight months ago, and the £60 million BOS plant Energy Recovery project, completed in May last year.
The new project will replace the BOS plant’s existing off-gas water-cooling system with an evaporative system that will produce steam, which will then be converted through a turbine into electricity.
Karl-Ulrich Kohler, managing director of Tata Steel in Europe, said the scheme showed further demonstration of the firm’s commitment to make its steel operations in Wales “a benchmark for the European industry”.